Thursday, January 13, 2011

Ending forced retirement

Ed Davey seems to be quite busy at the moment. He is the minister responsible for transferring Royal Mail to the private sector to ensure it has a strong future rather than the slow death it has been undergoing in the public sector. But today he has been leading on the proposals to end forced retirement at the age of 65.

With an aging population, this is the right move. Back in my policy unit days at the Lib Dems, scrapping forced retirement at 65 was one of the proposals I included in the business and employment paper I wrote. The policy working group looking into the issue concluded that the loss of productive and often skilled older workers from the workforce was damaging to the economy and increased the burden on the remaining workforce which was shrinking as a proportion of the population. An increase in the number of economically inactive older people left younger working people to pick up the bills.

In addition, many people have not made adequate provision for their retirement and therefore forced retirement for them at 65 is a financial disaster.

What we need instead of the sudden move from full time work to full time retirement is a transition period, allowing people to move gradually into retirement. That will need some changes to the pension system to allow people to work and receive part of their pension at the same time. This sort of flexibility is going to be more important as the population continues to age.

So Ed Davey has moved employment policy in the right direction today. There's plenty more to do but the plans today are a step forward.